tag:blogger.com,1999:blog-18675105.post3172998368401451823..comments2018-02-07T06:22:49.754+00:00Comments on HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: HOMEDEBTORS OF AMERICA - EVERY ONE OF YOU - STOP PAYING YOUR MORTGAGE IMMEDIATELY IF YOU WANT BARNEY FRANK & BIG DADDY GOVERNMENT TO TAKE CARE OF YOUbloggerhttp://www.blogger.com/profile/06585266242070350399noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-18675105.post-38860137698085558982008-05-11T02:09:00.000+01:002008-05-11T02:09:00.000+01:00Thank txgman.I hope you don't mind I used the same...Thank txgman.<BR/><BR/>I hope you don't mind I used the same letter for my reps in AZAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-3231370740346127802008-05-08T02:37:00.000+01:002008-05-08T02:37:00.000+01:00Let's all Quit paying our Mortgages and use the mo...Let's all Quit paying our Mortgages and use the money we save to buy Gold, Gold, and more Gold. That'll drive gold prices through the roof and make central banks look bad on inflation. I propose a subprime gold bomb. Don't get mad! Get even!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-6543622468491057822008-05-08T02:29:00.000+01:002008-05-08T02:29:00.000+01:00Let's all just quit paying our mortages and use th...Let's all just quit paying our mortages and use the money we save to buy Gold, Gold, and more Gold. Don't get mad. Get Even!!!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-18729734630792105902008-05-07T18:28:00.000+01:002008-05-07T18:28:00.000+01:00Here is my letter that I sent to my representative...Here is my letter that I sent to my representatives:<BR/><BR/>Sir/Madam,<BR/>I am writing to you to express my concerns about the ongoing housing/mortgage problems, and policymakers’ repeated attempts to interfere with the natural course of free markets. I am appalled by the entire situation, and by the pandering response from Washington lawmakers, who continue to insist that something must be done to assist borrowers in danger of losing their homes, as if somehow these people are “victims” of this mess. <BR/><BR/>The fact is that these people did not get into this situation by an act of god, terrorism, or other unforeseen event. Almost all the surge in foreclosures is due to borrowers either taking on loan terms they knew they could not afford, not bothering to read or understand the contract they were signing, using their home as a personal ATM machine, or lying about their income to get a loan they could not afford. In almost all these cases, the borrowers gambled on higher home prices, and now that the gamble didn’t work, they are justifiably in jeopardy of losing their home.<BR/><BR/>If the free market was allowed to work, many of the borrowers in trouble would do what other responsible borrowers do – cut back on spending, take a second job, or otherwise find a way to make the payments they are obligated to make. Many others will lose their homes, but they won’t become homeless – they will become renters like many Americans who had enough personal responsibility not to take on an unaffordable mortgage. <BR/><BR/>Instead, Washington is considering another travesty bill that would use taxpayer money to assist these irresponsible and undeserving people. The current Barney Frank proposal would allow them to stay in their comfortable homes, essentially giving these people a purchase price that was not offered to the rest of us that would have liked to buy a home when those people overpaid, but made THE RIGHT DECISION and walked away. Furthermore, this ludicrous proposal actually provides an incentive for borrowers to default, as the defaulting borrower would get tens of thousands of dollars reduced from their mortgage, while the responsible borrower who continues to meet payment obligations gets nothing! If such a bill passed, I suspect a large number of Americans will suddenly develop trouble meeting their next mortgage payment. It is bad enough that these people will not face a tax consequence for any mortgage forgiveness offered by the lenders, a poorly construed piece of legislation that basically amounts to tax breaks for gambling losses. <BR/><BR/>Politicians appear to be blind to the fact that a clear message is being sent by their actions: In order to get what they want, American citizens should lie and/or agree to terms they know that they will not be able to meet, take on risks without concern for consequences, and then cry to elected officials for relief when the bill comes. Hardworking, responsible citizens are being taught that honesty, personal responsibility, and playing by the rules are just naïve ideas for suckers. <BR/><BR/>Please do not insult the intelligence of your constituents by parroting the ridiculous arguments that bailing out these people is somehow good for the economy, or that no one wins when homes are foreclosed. Foreclosure is a justifiable consequence for gambling borrowers who made the decision to overextend their finances. In addition, foreclosures will result in a much faster “mark to market” for real estate prices, something that is desperately needed in order to make homes affordable for responsible American families utilizing realistic mortgage terms. In essence, one irresponsible family’s loss of the “American Dream” of home ownership is a more responsible family’s gain of that same dream. It is an economic inevitability that prices WILL correct to match average incomes and rents, but continued high housing prices is only forcing more borrowers into loan terms they cannot afford. <BR/><BR/>In closing, I would like to say that I finally understand the frustration that caused the Sons of Liberty to dump crates of tea into the Boston Harbor 235 years ago. Honest, responsible Americans are receiving inadequate representation in Washington’s preposterous rush to reward a group of citizens driven by materialism and greed in a bonfire of irresponsibility, fraud, and deceit. I have no doubt that our country’s forefathers would be shaking their heads in disgust at the actions by our current public servants in Washington.txgmannoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-34509812308779483852008-05-07T15:33:00.000+01:002008-05-07T15:33:00.000+01:00Bush has just announced he WILL VETO THIS PLAN!! ...Bush has just announced he WILL VETO THIS PLAN!! (which will be the one decent thing he accomplishes)!!!<BR/><BR/>WHY can't our leaders be honest about the absolute mess we are in and what it will really take to fix it.<BR/><BR/>PRICES crashing back down to their natural levels will restore affordability to housing. It is the CURE for the DISEASE. Anything else is a placebo!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-52009512067067325562008-05-07T14:24:00.000+01:002008-05-07T14:24:00.000+01:00What happens when the next bubble bursts in our ec...What happens when the next bubble bursts in our economy.Bubbles are part of the economic fabric.Big Daddy (Govt) will set a precedent for the future that will have repercusions and ripples in all other areas. Any bad decision will demand a govt mop-up.If someone sells the bailed out house for a profit will the profit be paid back to the taxpayer. I think not.Hold on to our hat America it's going to be a bumpy ride.Family, morals,homes,all the things that represent the glue or mortar that bind a society together are begining to unravel.Someday Ancient Rome and the USA will be mentioned in the same breath unless we wake upAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-31311436890736148182008-05-07T06:08:00.000+01:002008-05-07T06:08:00.000+01:00This kind of Fed action will make matters worse by...This kind of Fed action will make matters worse by postponing the pain. They can't stop the crash. 300 billion new dollars will not save the market. It will continue to destroy the dollar and likely trigger hyperinflation. It literally will be hurting everyone to save an undeserving few.deepcginoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-89560158615710471582008-05-07T06:03:00.000+01:002008-05-07T06:03:00.000+01:00BTW, just for the record, IMHO, banks and central ...BTW, just for the record, IMHO, banks and central banking are not worth saving . . . risk evaluation is the bank's job number one. Nobody would suggest a bridge engineer whose bridge collapsed should have his career saved to design a new bridge another day; in all likelihood, he'd be in jail! <BR/><BR/>However, seeing that central bank is created to bailout bank follies, and we do have central banking laws the require all of us to accept the fiat money at face value . . . the reality is that we are in real danger of hyperinflation and thorough destruction of the economic prosperity that Americans have taken for granted for over three generations. I just think we need some creative solutions that will do the least amount of damage before the nuclear button is pushed at the FEd. When hyperinflation hits, none of us will gloat, not even the ones with hundreds of cans of food and thousands of rounds of ammo. At $6-10 a gallon, the truckers will stop working; at $20-30 a gallon, freight trains will stop running; most parts of the country can't grow enough food to keep themselves alive.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-21323569406963354272008-05-07T05:46:00.000+01:002008-05-07T05:46:00.000+01:00Yoski,Very good points. A 17+ years long decline ...Yoski,<BR/><BR/>Very good points. A 17+ years long decline to sort things out like Japan has been going through would be a disaster indeed. Frankly, I don't think Americans are cut out to be as docile as Japanese when the economic nightmare drags out that long. Even for Japan, there has been a significant rise of random violence due to civil discontent after the one-decade mark. <BR/><BR/>I also agree that eventually, when housing price go back to the historical level where it can be sustained by rent income generation, a typical $500k house in 2006 will be worth about $200-250k, inflation adjusted, as the current rent on such a place is only $2000 a month (100x monthly rent was the standard metric when I started looking for income properties in 1995). That's a huge gap to cross (from $500k to $250k). The homedebtors are tapped out, and the banks are tapped out, too. The only solution the governmet officials are talking about is massive inflation to fill the gap. Any money they print up through the normal money creation channels will go to the young and perky bubble called commodity speculation first instead of reflating the old saggy housing. FED would be pushing on a string.<BR/><BR/>IMHO, there is a better way, like I mentioned above. Matching new buyer downpayment will go a long way towards incentivizing people to put money towards housing to cushion the fall with their downside partially covered; yet because it's not another put option and the new buyer would have to put down substantial money to get the benefit, the new buyer will have incentive to shop for value responsibly (weeding out the outstanding mortgage frauds in the process). Banks will be saved in most cases, but will pay for the existing mortgage fraud cases, beteen them and the fraudsters. The new buyers will probably still lose most of the incentive money in the years to come simply because housing prices will continue to drop until price can be justified by rent income. However, we will have responsible homeowners in place much sooner to prevent neighborhood decay; current home debtors will be out of a debt trap, and be able to rent and save while waiting for prices to fall. Government will probably spend less money in this way than if it had to bail out all the loans in the banks' books. It also beats direct subsidy to existing homeowners because a mortgage reduction would still have little of the current occupants' financial skin in the game, unlike a new buyer with substantial downpayment would . . . not to mention $100k to current owner with $500k debt would only reduce mortgage payment by 20% (probably not enough to counteract the full amortization adjustment); what's to prevent the current occupant stop paying again the next month? Whereas $100k matching $100k downpayment from a new buyer would reduce the mortgage payment by 40% even if the buyer pays the full loan amount and effectively bails out both the current homedebtor and the bank entirely! With $100k of his own money in the game, he'd much less likely to default; not to mention his track record of savings proving his ability to manage finances. He will be much likely to succeed in handling the resulting smaller debt than the previous occupant who would have to handle a bigger one.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-43955871472683885582008-05-07T05:16:00.000+01:002008-05-07T05:16:00.000+01:00Refuse to buy overpriced,Thank you for your input....Refuse to buy overpriced,<BR/><BR/>Thank you for your input. My plan definitely will definitely help out the honest first-time buyers far more than the out and out fraudsters. . . because the honest buyers, with a transaction price that was not outlandish to begin with, especially after their 20% down, have much less mortgage. If they do need to sell, the new buyer with the downside put option in place, will much more likely to pay them enough to cover their outstandig loan. If no sale necessary, then no rescue is necessary. People make mistakes and are allowed to pay the price and correct them just like in stock market crashes. Having a government official to step in and judge who was an honest dupe who was not would be rather tedious and prone to corruption. The existing homeowners already signed the contract; invalidating it without bankruptcy proceeding would only lead to irresponsible behavior in the future.<BR/><BR/>What I'm getting at is an incentive program to get people pitch in new private funds voluntarily to save the financial system (and some argue, social stability). It's a little like tax incentives for blighted areas and disaster zones. Frankly, the housing and mortgage industry is a blighted disaster zone right now. IMHO, it's a better approach than just having the government print up a ton of money and hand over to people who lost their homes to disasters. . . that would lead to widespread construction in places that they shouldn't build to begin with due to disaster risk. Instead of such routine direct bailouts, giving tax breaks to charity and rebuilding efforts after the disaster is very different.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-88001343646532463852008-05-07T05:01:00.000+01:002008-05-07T05:01:00.000+01:00"Come on, how many first time buyer/renters have 1..."Come on, how many first time buyer/renters have 100K in the bank?" <BR/><BR/>People with no money to put down buying homes now will only lead to more foreclosures in the near future. As the data show, income and affordability are only secondary to how much of the borrower's skin is in the game. To prevent cascading foreclosures and bankruptcies, houses have to go into strong hands who have substantial amount of their own money in the game. $100k savings for a 30-35yo couple renting for the past decade shouldn't be too hard. $3-5k a year IRA contribution each person each year work out to around $80k for the couple. Most jobs have 401k plans that allow more contribution than that. IRA withdrawal for first-time home purchase is tax free, no penalties and doesn't have to be put back. If a pair of renters have not been contributing to their IRA's to the fullest amount, or have alternative investment/saving plans while renting for 10 years, including understandable circumsttances like student loans, they have no business buying homes in this declining market. More weak hands will only lead to more foreclosures in the future. <BR/><BR/>What we need today are strong hands who can buy house with substantial amount of money down, so they have their own skin in the game. Banks will be much safer when those new owners make up the loan portfolio. Letting those people to buy houses with their own money (with incentives) will also sort out what were hopeless mortgage frauds and what were marginal cases that could be saved.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-33016321355347472582008-05-07T02:43:00.000+01:002008-05-07T02:43:00.000+01:00So what happens to those whose homes are already f...So what happens to those whose homes are already foreclosed ?<BR/><BR/>Do they get free homes?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-14105338131823409792008-05-07T01:26:00.000+01:002008-05-07T01:26:00.000+01:00House prices will return to historic norms with or...House prices will return to historic norms with or without bailout. That's entirely not the point. There's is no way the FED or Congrss or whoever can fight the market forces. Japan tried, see what happend to their economy and their real estate prices.<BR/>The point is that after real estate returns to its normal historic valuation the FED & government spend a bunch of money on bailouts while accomplishing exactly ZERO. That's how it will end, nobody can fight the market forces on the long run.<BR/>So what, they reduce the $500K mortgage to $300K. Then the house falls to $200K 'cos it's still way too expensive and nobody can get any credit. Then what? The home debtor still walks and the place goes into foreclosure. Now, Fannie/taxpayer is the bagholder instead of some bank/investor. That's how it will end. Instead of Citibank, Wells Fargo, Countrywide, etc. taking it on the chin, the taxpayer will take it on the chin. All this will have little to no effect on actual pricing of houses, just on who pays for the mess.Yoskinoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-82198569873303994822008-05-07T01:24:00.000+01:002008-05-07T01:24:00.000+01:00Anon 8:15 and 8:56,Stop projecting. Coming up wit...Anon 8:15 and 8:56,<BR/><BR/>Stop projecting. Coming up with 20% cash down payment on a million-dollar house would be a cake walk for me. I just don't find the five-bedroom house that I'm current renting is worth more than doubling the rent that I'm paying. The difference between renting a million-dollar house for only $3.2k a month vs. taking out a mortgage to buy it plus another $1k a month for property tax is enough to keep a full-time home-office assistant, who can keep all the chores of life in order while I do things that I enjoy, including blogging . . . while the returns on the $200k allocated to other asset classes making much higher returns than a house would for the next 10 years or more.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-83898245441883288972008-05-07T01:05:00.000+01:002008-05-07T01:05:00.000+01:00"reality" may have a point. Congress is tempermen..."reality" may have a point. <BR/><BR/>Congress is tempermentally incapable of not intervening. Perhaps the best that can be hoped for is a plan which rewards good behavior. It might not sit well with Libertarian purists, but it would be better than current plans which reward bad behavior.<BR/><BR/>So, how about rewards for responsible buyers screwed by the bubble?<BR/><BR/>Who was screwed hardest by the bubble?<BR/>First time home buyers who bought a house in 2005-2006, particularly a low end house below local median since these were proportionately the most overpriced.<BR/><BR/>Definition of responsible buyer:<BR/>1. Made a substantial downpayment, preferably 20% but at least 5%.<BR/>2. Did not lie about income on loan application.<BR/>3. Did not use unethical means to boost credit score to obtain loan.<BR/>4. Loan did not have an "interest only" period.<BR/>5. House was purchased as a primary residence, not second home or investment.<BR/>6. Has not missed or been late on a payment since closing.<BR/><BR/>A second round of stimulus checks for people like this would reinforce responsible behavior, and Congress would feel like they were doing something.Refuse to buy overpricedhttps://www.blogger.com/profile/04529128673944692315noreply@blogger.comtag:blogger.com,1999:blog-18675105.post-13792714666818183002008-05-06T22:09:00.000+01:002008-05-06T22:09:00.000+01:00"The American sheep are a big bunch of dumbed down..."The American sheep are a big bunch of dumbed down pussies."<BR/><BR/>True - and the ones that stand up for themselves are labeled lunatics and crazies.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-30965726977848959782008-05-06T22:07:00.000+01:002008-05-06T22:07:00.000+01:00"Now if a current renter-saver who has $100k to pu..."Now if a current renter-saver who has $100k to put down can get the house for $350k"<BR/><BR/>Come on, how many first time buyer/renters have 100K in the bank? Not many, because the f'ing boomers do not want to pay us shit and we have no money because we are paying off absurdly high student loan balances.<BR/><BR/>F this, I'm taking my ball.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-30831997941839182522008-05-06T21:26:00.000+01:002008-05-06T21:26:00.000+01:00Likewise, I tried the federal reserve.gov site, wr...Likewise, I tried the federal reserve.gov site, wrote my 2-cents and got a reject message that there was an error. I think the error is in our Federal Reserve Board, and our five o'clock news, and our roadapple-for-a-president.<BR/>I don't trust much anymore and, thankfully, my own husband is starting to "wake up" and smell the crap he reads in the newspaper and watches on TV. Man, it was hard watching him float around in a coma for so long. At least his coma is over and we can reall TALK about this crap leadership.<BR/><BR/>Come on BoA, wake up too.MRS. BENTLEYnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-80485678100013366892008-05-06T21:17:00.000+01:002008-05-06T21:17:00.000+01:00"There's about to be a revolution. People are gett..."There's about to be a revolution. People are getting fed up with The Fed and Washington District of Criminals."<BR/><BR/>NOT ! The American sheep are a big bunch of dumbed down pussies !Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-13916005514839363042008-05-06T20:56:00.000+01:002008-05-06T20:56:00.000+01:00some of you people have way too much time on your ...some of you people have way too much time on your hands....i'm talking to you reality<BR/><BR/>hey i know...maybe if you spent less time blogging and more time working you too could afford a houseAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-47220287343838902362008-05-06T20:15:00.000+01:002008-05-06T20:15:00.000+01:00"Why are we "bitter renters" going to be gloating ..."Why are we "bitter renters" going to be gloating a few years from now, if the government is going to come in and bail out these overextenders, lower theur payments, etc? This will keep housing prices unaffordable - we'll still be bitter renters."<BR/><BR/><BR/>FINALLY!! You idiots are starting to understand what's happening. You will live in your shithole 1 bed 1 bath for the rest of your miserable lives.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-68072320871860529572008-05-06T20:12:00.000+01:002008-05-06T20:12:00.000+01:00nasdaq up 1% yet again todaybailout is a done deal...nasdaq up 1% yet again today<BR/><BR/>bailout is a done deal<BR/><BR/>HP regulars crying in their beerAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-66323547395567382192008-05-06T19:19:00.000+01:002008-05-06T19:19:00.000+01:00Yes, this idea is idiotic. But like all ideas befo...Yes, this idea is idiotic. But like all ideas before it proposed by members of the government, it still just comes down to political pandering.<BR/><BR/>And this will have no effect on the decline in housing prices other than stretching the decline over a longer period of time. House prices still have to come down for the simple notion of affordability. Keeping people in an overpriced asset is merely a bandaid. Unless the government is planning on issuing a whole slew of 1% mortgages to NEW homebuyers, the end result is still the same. <BR/><BR/>People that think this housing situation is over are both naive and stupid. We are merely at the beginning of this debacle. This will take YEARS to play out, with government intervention or not. Considering that this bubble had its origins in 1997-98 reaching is zenith in 2005-6, does anyone here honestly think only a mere two years or so of correction will bring us back to equilibrium? For a market as illiquid as real estate? Please. It took the NASDAQ 2 1/2 years to find its bottom and that's a stock market index!<BR/><BR/>We are looking at between 3-5 more years AT LEAST of declines in housing before there is even a remote possibility of stability. Longer in some areas where bubble prices became stratospheric.<BR/><BR/>In the mean time, the government will bungle and debate on how to "solve" the crisis. And like all interventionist government policies in the past, they will merely delay or exacerbate the inevitable.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-65638897254446440082008-05-06T19:14:00.000+01:002008-05-06T19:14:00.000+01:00Anon 5:55,Thank you so much for the critique. I t...Anon 5:55,<BR/><BR/>Thank you so much for the critique. I too had concerns about potentially new types of frauds. Perhaps, instead of direct payout right away, the matching downpayment subsidy is doled out over time as tax credits at tax time for offsetting federal tax owed and can be carried over years; i.e. not a payout but a tax reduction to zero for a few years. Given our current 2% interest rate, the time value cost to anyone with cash lying around would be low, but to anyone who would have to borrow to get the downpayment the time value cost would be high; also anyone borrowing to get downpayment to qualify for this program will also be deemed fraud and have the tax benefit forfeited plus penalty upon discovery. That will go a long way to screen out potential frauds and limit the number of lenders willing to take a chance on any fraud-facilitating loans and drasticly raise the interest rate they'd charge for special "piggyback" loans designed to game the system. <BR/><BR/>There is no real chance of saving homedebtors who are way over their head, aside from bankruptcy protection. This program is geared towards saving people who are marginally under-water. More importantly, motivate new buying. The more private savings that can be mobilized, the more relevant the program can become. For example, on a house with $500k loan and now asking $400k, someone with $200k cash to put down can get the house now with $200k down, $200-250k loan right now, and have $200k back in tax credits in the years to come. The total cost of the house will end up being $250k or so, with future tax credit paying for mortgage payments for a few years :-) <BR/><BR/>What we really need today is a system that will induce savers to put money into downpayments, so that the new homeowners will have their skins in the house. Obviously, the current price level is not enticing at all for folks who can crunch numbers and save+invest. Waiting for further price drop is like waiting for the paint to dry as the banks dream up all sorts of book cooking to obscure the non-performing loans . . . and any general FED printing will just cause massive inflation everywhere else except for the most recently busted bubble -- housing. Any buyer now will also be looking to have as little skin down as possible, especially if there is bailout plan for those who do not pay. There has to be hefty incentives and downside protection before people will hold their noses and buy houses at any price level that doesn't lead to systemic bank failures. Just like FED underwrte 29 billion downside protection for JPM to buy BSC, the federal government can underwrite downside proteciton for new home buyers; an amount equal to buyer's downpayment sounds fair and will motivate people to help themselves first and have their own skin in the game. IMHO, this just might just be the ticket to get people coming off the sidelines. Like you said, the key is to come up with a way to prevent fraud; I think the tax credit method might just be the ticket.Realitynoreply@blogger.comtag:blogger.com,1999:blog-18675105.post-92168461972337783802008-05-06T18:29:00.000+01:002008-05-06T18:29:00.000+01:00Barney is the Queen of the BankersBarney is the Queen of the BankersAnonymousnoreply@blogger.com